The Rajya Sabha on Wednesday saw sharp exchanges among parliamentarians as they debated the much-delayed constitutional amendment bill that will overhaul the structure of indirect taxes in India, even though there is now a broad-based political consensus on the passage of the bill in the upper house.
Finance minister Arun Jaitley started the debate by saying it was important that a legislation of the importance of the GST Bill be passed with all the parties on board. “The proposal was to radically change the taxation structure and the government felt the need for a larger consensus,” he said.
Former finance minister and senior Congress leader P. Chidambaram said the GST tax rate should not be higher than 18%. The main opposition party had been opposing the bill but has now come around to pledge its support.
“The empowered committee is the one which arrived at a 15.5% revenue neutral rate and came to the conclusion that 18% should be the appropriate GST rate. The Congress did not suggest the 18% rate, 18% came out of your report,” Chidambaram said.
“Charging 24% and 26% on GST defeats the purpose of the bill. Your services represent 57% of GDP. It is hugely inflationary and there will be a huge backlash if you raise the service tax rate from 14.5% to around 24%.”
Mamata Banerjee-led Trinamool Congress has also finally come around to supporting the GST bill after protracted negotiations. TMC leader Derek O’Brien said that unlike the ruling Bharatiya Janata Party (BJP) and the Congress, which have both gone back and forth on the GST, his party had always supported the legislation in principle.
“It’s often confusing whether the BJP and Congress are supporting or not supporting the GST bill, unlike our party which has promised the GST in its manifestos. I feel like a teenager in the presence of these senior lawyers,” said O’Brien. He later said, “GST can also be interpreted as Girgit Samjhauta Tax – it’s like a ping-pong match between the two sides – (BJP and Congress).”
Shiv Sena, the BJP’s ally in Maharashtra, is opposed to GST, on fears it could lead to the Brihanmumbai Municipal Corporation (BMC) suffering revenue losses.
“Shiv Sena’s stand is clear. How will you compensate the loss that will be caused to BMC through GST?” party leader Sanjay Raut said in the Rajya Sabha, according to The Indian Express.
At least two parties, the All India Anna Dravida Munnetra Kazhagam and the Communist Party of India (Marxist), continue to oppose the GST. Leaders of both parties said the new indirect tax structure would undermine the fiscal autonomy of states.
AIADMK leader A Navaneethakrishnan said the GST violates states’ fiscal autonomy and will cause a permanent revenue loss to Tamil Nadu.
CPM leader Sitaram Yechury said, “Are we going to reduce the states to come to Centre with begging bowls to ask for money?”
He added: “How do we protect the rights of states? We (Rajya Sabha) are the council of states. I urge the finance minister to address this issue, and a provision be made when we discuss the GST bill.”
CPI’s D Raja, while opposing the bill, said we are yet to understand what the future would be. “We are going to enter into an unknown terrain. We are not clear about what the consequences would be,” he said.
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